Man Pleads Guilty in $485 Million Fraud Scheme

SHERMAN, Texas – 9/5/2010 - A 35-year-old Dallas man has pleaded guilty in the Eastern District of Texas for his role in a multi-million dollar oil and gas scheme, U.S. Attorney John M. Bales has announced.
   Joseph Blimline pleaded guilty to an information charging him with conspiring to defraud investors in an oil and gas scheme that involved more than $485 million and 7,700 investors throughout the United States. Blimline also pleaded guilty to defrauding investors in a second oil and gas scheme based in the state of Michigan that involved more than $50 million obtained from investors. He entered his pleas on Aug. 31 before U.S. Magistrate Judge Amos Mazzant.
   “Victims from across the country relied upon the representations made in the scheme before investing their hard-earned money into what they believed to be a vibrant opportunity,” Bales said. “Investment fraud is, at its core, a betrayal of trust by one person to another. We will be relentless in our pursuit of those individuals responsible for abusing the trust of others in order to obtain criminal profits.”
   According to information presented in court, beginning in September 2006, Blimline and other individuals, operating as representatives of Provident Royalties, made materially false representations and failed to disclose material facts to their investors in order to induce the investors into providing payments to Provident.
   Among these false representations were statements that funds invested would be used only for the oil and gas project for which those funds were raised. Among the omissions of material fact were the facts that Blimline was a control person over Provident, Blimline received millions of dollars of unsecured loans, Blimline had been previously charged with securities fraud violations by the state of Michigan and that funds from investors in one oil and gas project were being used to pay individuals who invested in previous oil and projects.
   In the second scheme, according to information presented in court, between November, 2003 and December, 2005, Blimline and other individuals falsely promised inflated rates of return in order to obtain payments from investors, which they then used to make payments to previous investors.
   Blimline faces up to 20 years in federal prison on each of the two conspiracy charges. A sentencing date has not been set. The case is being investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Shamoil Shipchandler.
  Source: Financial Fraud Enforcement Task Force.